The ratings on Spanish utility Gas Natural SDG, S.A. (Gas Natural) reflect Standard&Poor's Ratings Services' view of its position as Spain's incumbent gas utility, with a significant share of low-risk regulated gas and electricity activities in Spain and Latin America. These strengths are partially offset by the company's exposure to the weak macroeconomic environment in Spain and to volatile liberalized international gas and electricity markets. In addition, a lack of visibility on the evolution of regulation and the steady build-up of a tariff deficit in the Spanish electricity sector continues to weigh on the ratings. The latter is mitigated, however, by ongoing securitizations by the Spanish government to reduce the outstanding tariff deficit amount. In the six months
